Once you have your financial statement, do you have a useful management tool?
In The ROI's view, the answer is: "No."

Your financial statement should not be confused with an actual management tool.  All you have is your financial statement, a historical document. It summarizes what has happened in the past year.  And why must you have it? Because the data it contains is necessary to satisfy the IRS.

"So, is The ROI telling me it's okay for me to disregard my financial statement? Just put it away in the bottom left hand drawer again?" No, not at all! The key is to (1) recognize the limits of a financial statement, and (2) focus your time on those management tools that allow you to see ahead. 

Think of it this way: Would you drive your car by looking only in the rearview mirror, to see where you've already been? Not likely!  

Or, what about this: Would you drive down the freeway at night without your headlights?  No, of course not! You want to be able to see what's ahead, to know when you have to make adjustments in order to stay on the road, or avoid collisions.

Here's how can you "Turn on your financial headlights" in your retail business

• First, do spend some time with your financial statement, especially the Balance Sheet. You will need it to calculate your key ratios.(See The ROI's "cheat sheet" for the formulas.   ROI Members, of course, can just use the Key Ratios Calculator)
• Next, compare those ratios to your previous year: what are the trends? Which ones are improving? Any getting worse?
• Next, compare your performance to other stores like yours (see the Store Benchmark Ratios to find your segment)
• Finally, and this is a very important step: set targets for what you want your key ratios to be at the end of this fiscal year.

Once you have those targeted ratios, you have some key financial performance goals for the year.

Now you can focus on what it will take to achieve those goals. And, since you have determined the goals for the year - "What we want to accomplish" -  this is a great time to involve your key management staff. With their involvement, you can determine "How are we going to accomplish it."